Pricing Principles ???

[Colonel Hathi]

Hi
I am newly self employed and learning fast!!!

I am struggling though with how to price jobs fairly and competitively.

I have considered a few options:-
... basing things on an hourly rate of £50 as a flat rate to the customer - regardless of whether there are 1 or more men on the job.
... discounting the hourly rate by (say) 20% for each full days work
... charging one rate for the lead electrician and charging a lower rate for assistants
... charging on a "point by point basis" - so much for a socket, so much for a light switch

Although I have done a few estimates now, I am just not getting the work in!

We are London based and although I undertsnad that times are tough out there, I really need to get something going through the books

It is just hard to get a feel for what/how others are quoting and charging.

Maybe people are estimating ow prices to win work - and then loading up their bills later?? Not something I will get into.

Any comments and help is much appreciated.

Cheers

 

[bugsy]

I think you need to sit down a work out a buisness plan.

What are your fixed overheads
Van - (annual cost), van insurance , Road tax, P/L insurance , NIC/Nappit membership, tools,advertising,etc

Then your running costs , fuel, and day to day expenses

The sum of which you can divide weekly or monthly. ( depending on the hour you think your going to work)

That will give you a rough idea of how much you need to generate to sustain your business what you charge on top of that is up to you . when working uot your labour charges don't forget time you will spent doing VAT returns, certification , NIC/Napppit compliance and your books--

Best of luck and don't be to dispondant it is rather qiet at the moment

 

[ian.settle1]

Hi
I am newly self employed and learning fast!!!

I am struggling though with how to price jobs fairly and competitively.

I have considered a few options:-
... basing things on an hourly rate of £50 as a flat rate to the customer - regardless of whether there are 1 or more men on the job.
... discounting the hourly rate by (say) 20% for each full days work
... charging one rate for the lead electrician and charging a lower rate for assistants
... charging on a "point by point basis" - so much for a socket, so much for a light switch

Although I have done a few estimates now, I am just not getting the work in!

We are London based and although I undertsnad that times are tough out there, I really need to get something going through the books

It is just hard to get a feel for what/how others are quoting and charging.

Maybe people are estimating ow prices to win work - and then loading up their bills later?? Not something I will get into.

Any comments and help is much appreciated.

Cheers

You have 5 blokes on site you are paying them £11 an hour your out off pocket straight away.

As bugsey said you need to sit down and work out a business plan properly

 

[billy110]

There was a very good thread a couple of weeks ago, about 5 or 6 pages worth. Check out Mazdaman and what he had to say

 

[markhtly]

If anybody wants a monthly cash flow spreadsheet in Excel format,just give us a shout.

It's useful for working out overheads etc and therefore gives you a better idea of what you need to earn.

It calculates too

 

[offshorealex]

In many ways it is the chicken and egg scenario. People can usually pick up on the fact that youre new to things, and apprehensive. This is probably more to do with not getting the work than the prices. I fit electric central heating, and initially would struggle to get jobs for £2000 that I now sell comfortably 6 years on for over £3000. I don't think I'm doing anything different, but I guess I just come across more confidently now. Also people, being people, will happily pay a certain price if they know someone else who has paid the same price, so recommendations mean a lot and only come through time. What I did to get things going was simply to figure out a price that I could do the job for, and try to figure out what the customer is expecting to pay and pitch about there as long as I could afford to do it. You can lose work by being too cheap as well. Customers may feel that you are cutting corners if your price is half a competitors.
Biggest tool in selling yourself is a guarantee. Guarantee full parts and labour for as long as you can and remove any worries from the customer.
In my experience you shouldn't try to break down quotes too far. The internet has made it too easy for people to find out how much they can buy items for that used to only be available through wholesalers, and a also an employed person who works for £10 an hour doesn't want to see you charging £50 an hour labour. He doesn't see that the labour doesn't just go to pay your wages.
Hope some of that helps.
Alex

 

[Colonel Hathi]

Thanks for the comments.
Yes I see what you are saying about confidence - maybe that is a factor.

I had actually posted a response to previous answers - but it seems to have got lost in the ether

I do have a detailed business plan in place - in outline ...
I have kept overheads low.
The plan shows break-even if I am working 37% of the time
I had planned on the assumption that I would be working 50% of the time in year one.
I am just not getting the work in

Since setting up in December, I have estimated for 5 jobs without success.
I have tried a number of methods in an attempt to be competitive as per my initial post.

To give specific examples, I quoted £180 for a Periodic on a 2 bed property - and lost it to a competitor who charged £120. I was also going to quote £150 for Periodics on a development of 1 bed flats with which I am familiar. Apparently a competitor is doing these for £100!
We are London based and I thought my prices were reasonable as I like to do a thorough job.

Thanks again for taking the time to give advice and encouragement

Keep it coming!!

C

 

[pennywise]

Personally I don't see anything wrong with your prices that you've listed. These flats are they for one landlord or individually owned.

 

[offshorealex]

To give specific examples, I quoted £180 for a Periodic on a 2 bed property - and lost it to a competitor who charged £120. I was also going to quote £150 for Periodics on a development of 1 bed flats with which I am familiar. Apparently a competitor is doing these for £100!



There are plenty of busy fools out there! You can't price against people who aren't making money. I think you need to increase the volume of quotes you are doing and then by the law of averages you will price for jobs that are not being under priced
There are companies who will run up debts to the taxman, suppliers etc then fold as they are limited, and start over. This allows them to price jobs at what appears to be non profit making levels, but if you're not paying for the materials it's a different story.
As said before, if you can't make money at the price being quoted then there's no point doing the work.
Good luck.

 

[Colonel Hathi]

Thanks for the post.
The flats are individually owned.
There is a large development in which I own a few rental properties.
I had hope to make contact with Local Estate Agents and other owners to build a little pool of Periodics.
I though it would work out well as the flats are all obviously to the same design - so I could be able to do Periodics quite quickly.
Also they were built at a time when there was no RCD protection required - so some potential for upgrading CUs.
My general idea on periodics was to charge £180 for up to 8 ways and then £15 for each additional way.

On the flats I thought I could do £150 because I would be so familiar with them all being to the same design.

Thanks again for your comments

I know people are saying is tough out there but I really am feeling stressed about this.

Anyway, I am using all this spare time to study up on regs etc - so maybe it is not all gloom

Cheers

c

 

[leekemp85]

I only charge £15 an hour, been self employed for around 8 months and have only had a few days over some weekends off since I started. I have had to take on a few stubbies recenlty. I'm not in London tho. once I get my name around I can start to make a decent living. But for now I am happy to pay the bills with enough money to enjoy myself when I'm not working.

 

[RJS Contracts]

Would be interested in your exel spreadsheet

Many thanks

 

[Jason Smith]

Mate- you will struggle at the start, I did to , very much so. I found there was a kick off point, all of a sudden, things kicked off, referals, new customers, some of which also resulted in referals, referals from referals, another new customer , soon you wont know your arse from your elbow and you will be refusing to answer the phone when you are out shopping !!! Repeat customers rarely ask for a estimate, unless the job is a big one , I started with one customer a month- 100 a month is a bit soul destroying when you have listened to all the hype, e.g. 30, 000 electricians short this year,it takes about 18 moths before you can say, " cant help you I am busy " If your not getting quotes, your trying to hard, loads people dont even bother getting more than one quote. Relax, as our collegue says, come acros as the hero that has walked into the house, solver of all problems, and dont forget to ask for the job! dont ever be afraid of saying " When would you like me to start "- its called closing the deal ! Good luck mate !! Make sure you look the business, i.e knee pads, few screwdrivers sticking out from here and there, all that !! (clean van ) !!!

 

[andekoch]

If anybody wants a monthly cash flow spreadsheet in Excel format,just give us a shout.

It's useful for working out overheads etc and therefore gives you a better idea of what you need to earn.

It calculates too

could I get a copy please.

 

[allsparkjonny]

If anybody wants a monthly cash flow spreadsheet in Excel format,just give us a shout.

It's useful for working out overheads etc and therefore gives you a better idea of what you need to earn.

It calculates too

please may i have a copy been to meeting with princes trust today and they recommend i get hold of one
thank you